In re Initial Public Offering Securities Litigation case brief

In re Initial Public Offering Securities Litigation case brief summary
471 F.3d 24 (2006)

CASE SYNOPSIS

Defendant underwriters appealed from an order of the District Court for the Southern District of New York granting in part plaintiff investors' motion for class certification, pursuant to Fed. R. Civ. P. 23, in six securities fraud class actions, involving claims of fraud in connection with a series of initial public offerings (IPOs). In particular, the claims were made pursuant to the Securities Act and the Securities and Exchange Act of 1934.

DISCUSSION

• In its decision, the district court considered the issue of the standard of proof that plaintiff had to meet to obtain class certification, concluding that plaintiffs had to make "some showing." 
• The district court explained that the showing may take the form of expert opinions, evidence, or the uncontested allegations of the complaint. 
• The court concluded that the district court could not certify the class without making a ruling that each Rule 23 requirement was met, and that a lesser standard such as "some showing" for satisfying each requirement would not suffice. 
• Further, all of the evidence had to be assessed as with any other threshold issue. 
• The court added that the fact that a Rule 23 requirement might overlap with an issue on the merits did not avoid its obligation to make a ruling as to whether the requirement was met, although such a circumstance might appropriately limit the scope of the court's inquiry at the class certification stage. 
• Finally, with respect to the factors of reliance and lack of knowledge of the scheme, the court held that plaintiffs could not satisfy the predominance requirement for a Rule 23(b)(3) class action, and vacated the district court's order.

CONCLUSION
The court vacated the district court's order granting class certifications in each of the six cases and remanded for further proceedings.

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